THE IMPACT OF TAXATION ON SMALL SCALE BUSINESS IN A DEVELOPING ECONOMY
(A CASE STUDY OF EKENE DILI CHUKWU NIGERIA LIMITED ENUGU).
ABSTRACT
            This is a research work on the impact of taxation on small-scale business in a developing economy. A case study of Ekene Dili Chukwu Nigeria Limited Enugu.           It is aimed at ascertaining the extent to which Ekene Dili Chukwu taxation.       The area of study was Ekene Dili Chukwu Nigeria Limited Enugu. This study is divided into fire chapters. Chapter one gives the general introduction. Chapter two reports our review of related literature to the theme of this research. Chapter three describes the actual process and methods of the research, the research used. Chapter four gives the details of researchers analysis of the data using T. test statistical formular in test of the Null Hypothesis.     Finally, in chapter five, the researcher presented recommendation as well as suggestion for further research.
TABLE OF CONTENT
CHAPTER ONE
Introduction                                                               
1.1    Background of the Study                                                           
1.2    Statement of the problem                                                                       
1.3    Objectives of the study                                                               
1.4    Scope of the study                                                                                              
1.5    Research question                                                                                   
1.6    Null Hypothesis (H01)                                                    
1.7    The significance of the study                                                      
CHAPTER TWO
Review of Literature                                                              
2.1 The concept of taxation                                                               
2.2 The concept of small-scale business outfits                                 
2.3 Classification of small-scale business outfits                               
2.4 Role of small-scale business enterprises.                                      
2.5 Impact of Taxes.                                                                          
2.6 Summary of the related reviewed literature.                               
CHAPTER THREE             
Methodology                                                                                     
3.1       The research design                                                                
3.2       Population of the study                                                                     
3.4       Sample and sampling procedure                                                        
3.5       Instrumentation                                                                      
3.6       Validity of instrument                                                                       
3.7       Reliability of instrument                                                                    
3.8       Administration of instrument                                                            
3.9       Method of data Analysis.                                                      
CHAPTER FOUR  
4.0 Data presentation and Results.                                                                
      Summary of results / findings.                                                     
CHAPTER FIVE     
5.0 Discussion implication and Recommendations                           
5.1 Discussion of Results                                                       
5.2 Conclusion                                                                                               
5.3 Implication of the study                                                              
5.4 Recommendation                                                                         
5.5 Suggestion for further study                                                        
5.6 Limitation of the study.                                                               
References                                                                                         
Appendices                                                                
CHAPTER ONE
INTRODUCTION
1.1     BACKGROUND OF STUDY.
The successive development plans of Nigeria have laid emphasis on the attainment of self-reliance and actualization. The need for this national objective is because much is expected from individuals from the viewpoint of “providing employment opportunities, self reliance in basic food and material production, high per capital income, foreign exchange earnings, and the production of industrial raw materials”.
It is generally agreed by many that the way out of the problem of economic development for many developing countries is to devote a lot of energy to the development of small business enterprises. The modern economists small business development as a necessary step for rapid growth. But Nigeria small-scale enterprises continued to decline despite the so-called priority given to this sector. In developing countries in particular, it is now realized that large business have played, and cannot alone, be expected to play the dynamic role that they are supposed to play in the rapid growth and development of the economics. This is because in Nigeria, as many other developing countries there is a dearth of financial institution which cater for long and medium term credit needs of business operations in the economy. Small-scale enterprises are not in exception to these and they suffer a great deal for want of capital for development and expansion. In any case, the discovery of the central banks that, this policy was not enough by itself led to the central bank to request with effect from 1970 / 80 that all commercial bank must reserve a proportion of their minimum credit allocation to indigenous borrowers for small scale in Nigerian enterprises. It is becoming evident that small business, which had seen neglected, could play the aforementioned roles, as well, if not better than the large business establishments. However many countries are what they are to day because they adopted the atragy of developing their small business outfits. For example, the transformation of Japan from a relatively backward trading nation into a modern industrial giant was as a result of the development of highly efficient small business concerns. But in Nigeria, it is a different case in that Nigeria has failed to adopt this strategy owing to the belief that paying attention to small scale business is a relatively show process of industrialization which may not be very compatible with their desire to “catch up” with the industrialization countries. This was done by adopting the “import substitution strategy aimed mainly at producing domestically consumed goods that were imported from elsewhere.
In Nigeria, emphasis is at present unit on small-scale business in all sectors of the economy. With the supportive role of the government, small scale business are capable of pulling Nigeria out of the present economic malaise’s especially if the land materials are locally sourced. Many Nigerians are being called upon to invest in small-scale business. To back up this determination, the federal government has established some agencies to advise and co-ordinate the efforts of small business entrepreneurs. However, there is a need to emphasize that the small business is still affected by the government fiscal policy like taxation. This research work is of the intent to examine the impact of taxation on small business in developing economy. It is most unfortunate that a lot of small business outfits deliberately evade tax payment, despite the fact that they are usually given tax holiday for their first five years of their commencement of business. This could be attributed to their ignorance of some objective which taxation might be used to accomplish. The general objectives of taxation can be stated as follows: -
a.       Restraining or curtailing and this transferring resources from consumption to investment.
b.      To counter or reduce inflation
c.       Modify the pattern of investment
d.      Mitigation of economic inequalities
e.       Maintenance of balance of payment
f.       Increase the incentive of save and invest.
Taxation can help small business to get a high profit target bearing in mind that they will pay tax from the profits they make. From the above assertion, it is obvious that taxation has some impact on the establishment of small business. In the economy through, there are manipulations of taxation rules for the encouragement of small business. This research work is an attempt to Enquirer whether a high incidence of corporate tax will go a long way to reducing the number of small business establishments which can bring about unemployment in the country.
1.2                    STATEMENT OF PROBLEM
Small scale enterprises like any other business cannot be careered on extensively unless finds are available for maintenance and procurement of equipment and necessary input. According to Teriba (1978) taxation when applied excessively on the ,income of corporate bodies discourages industrial growths and so brings about an increased unemployment in economy. These statements are as follows: -
a.       Ekene Dili Chukwu Nigeria limited and other indigenous companies did not enjoy pioneering status or tax-free period due to the nature of the tax laws on this country.
b.      Most entrepreneurs in Nigeria, Ekene Dili Chukwu inclusive did not declare all their assets because of the taxation policy of the country.
c.       Ekene Dili Chukwu Nigeria limited has been expanding because of the huge company tax imposed on her by the government.
d.      The benefit inherent in the payment of tax such as insurance coverage and others where not extended to Ekene Dili Chukwu Nigeria limited and other indigenous business in Nigeria.
1.3                    OBJECTIVES OF THE STUDY:
The objective of this research can be itemized as follows: -
a.       Evaluate how the rate of taxation effects the rate of investments in the economy.
b.      To ensure the rate of expansion by small business relative to the different rate of taxation.
c.       Evaluate the general desirability of the firms and individuals for investment purposes as a result of taxation.
d.      To evaluate various measures introduced to boost industrial production and its financing and how this has effected the realization of the set goals.
The researcher will look at the impact of taxation on the small business with the relevant data collected from some firms. In some parts of Nigeria to show whether taxation actually effects the establishment of small businesses in the economy.
1.4                    SCOPE OF THE STUDY
The scope of this research covers a critical examination of the impact of taxation on small-scale business enterprises in a developing economy. It will also analysis the function of taxation. There were a lot of difficulties encountered in obtaining information for this study. Most of the respondents were unwilling to release useful and reliable information in a study of the nature. Some person who was around was skeptical to which use the data supplied would be put. Most of the small-scale business outfits used do not keep accurate accounts and records of the amount of taxes they pay. It was not possible for the researcher to go round the while state in the country to gather information. The researcher goes to those two eastern states Enugu and Anambra for ease of accessibility for collecting the research data.
1.5                    RESEARCH QUESTIONS
To achieve the purpose of the study research questions were formulated as follows: -
a.       Does high incidence of taxation limited the savings capacity of individuals in the economy?
b.      Does high incidence of taxation bring about increase in unemployment?
c.       Does taxation have effect on the quantities of food production in the country?
d.      Many small-scale business owners are unable to pay back loans mobilized for their business because generated revenues are directed to other uses.
1.6                    HYPOTHESIS WHERE APPLICATION
Ho:                  That high incidence of taxation does conform to bringing about an increase in unemployment.
Ho:                  That high incidence of taxation does not conform to limitation of the saving capacity of individuals.
Ho:                  That taxation has conformity effect on the quantifies of food production in the country.
Ho:                  Many small-scale business owners are able to pay back loans. Mobilized for their business because generated revenues are not directed to other uses.
1.7                    SIGNIFICANCE OF THE STUDY
One of the most frequent discussed issues in Nigeria now is how to solve the economic hardship in the country and how to create an industrial base that can guarantee self sustaining growth.
Nevertheless, the country which is richly endorsed with the necessary human and material resources has turned from an agricultural resources economy to a “mono prominent” Economy dependent on the petroleum for the foreign exchange earnings. Unfortunately too, the country has achieved only a fragile industrial development after adopting strategy based on large industries, which tend to be capital intensive and mapropriate, given the nation’s resources endowment. But it is important to note that with the supporting role of the government, small businesses are capable of pulling Nigeria out of the present economic malaise, especially if the raw materials are sourced locally. This research is significant in the sense that it seeks to find out the reasons that make small scale business not easily able to diversity or expand as well as offer solution to this problem.
Again this research is of academic significance to the extent that it will serve for better understanding of the impact of taxation on small scale business in a developing economy like Nigerian.